Costello pushes USD$600 mil investment in Cambodia

ABC Radio Australia

Updated January 25, 2010

Australia's former Treasurer Peter Costello (pictured) left parliament four months ago and now is hard at work in Cambodia. Mr Costello is acting as a financial adviser to an investment fund that's planning a 600-million dollar project. If successful it will be the biggest single foreign investment in Cambodia to date, roughly equalling the total approved investment in the country last year.

Presenter: Karon Snowdon
Speaker: Peter Costello, former Australian treasurer

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SNOWDON: Peter Costello was Australia's longest Treasurer, holding the post for the 11 years of the Howard Government. Mr Costello resigned from Parliament in October having spent two years in opposition after the Liberal party lost the 2007 federal election.

In November he joined the Australian company BKK Partners, which provides financial and corporate advisory services in the Asia Pacific region. His client in Cambodia is Indochina Gateway Capital Limited, which focuses on private equity investments in Cambodia, Laos and Vietnam. Its hoping to develop an agri-business fund to focus on Cambodia's agriculture.

Peter Costello told Steve Finch of the Phnom Penh Post newspaper he's in the country to meet with government officials.

COSTELLO: The proposal is that the investment would be in rice, sugar, bananas. That other investors would put together a sizeable sum that would bring the best of Australian technology to the agriculture sector and export state of the art agriculture production to markets outside Cambodia. Its a very large scale investment. We're looking at 600 million [US dollars].

SNOWDON: Mr Costello says Australian technology and know-how will benefit Cambodia.

COSTELLO: Australia is one of the world's major agricultural producers. And that technology, if it were brought into a country like Cambodia, would lift productivity enormously.

SNOWDON: And he believes there are potentially good returns for investors.

COSTELLO: Personally I think agriculture is going to be a great industry for investment. We have seen a spike in food prices in 2008. So I think agriculture is going to come back into its own as an investment in the decades that lie ahead and of course that's a great opportunity for Cambodia. Countries that have natural advantage in agriculture should make the most of them. I think it'll be good for Cambodia, I think it'll be good for Australia by the way. I think its a natural fit.

SNOWDON: The Cambodian Government has made agricultural development its main priority for achieving higher growth and poverty reduction. Around 80 per cent of the population lives in rural areas and in poverty, dependent on agriculture, mainly rice.

According to the Phnom Penh Post, the scale of the IndoChina Gateway project is bigger than anything previously seen in Cambodia. If the fund raised its target of USD$600 million, it would be more than the total of all domestic and foreign investment in the country in 2009. Last year saw a big improvement though - investors are looking at Cambodia with fresh ideas.

But Peter Costello says there's still a long way to go to reassure investors who need a better legal system, business regulation, and straightforward anti-corruption measures.

COSTELLO: There's a reason why we should be against corruption. Eventually corruption undermines development. People who think you can develop an economy and turn a blind eye to corruption are wrong. Really the first thing you need for development is certainty and security for investment and corruption undermines and corrodes that.